INCOME REPORT

The Income Report is centered around an investment principal of ensuring capital preservation and income.
The report details our income investment process which is structured to create a diversified model portfolio across the sectors in companies which we view offer stable and sustainable cashflow.
We review the investment fundamentals of each company to ensure they have a sustainable competitive advantage and healthy balance sheet.
The model portfolio offers investment weights for each stock to ensure investors diversify their investment risk and are not unintentionally exposed to any single sector.

WANT OUR LATEST INCOME RECOMMENDATIONS?

Shares to buy: Boral Limited (BLD)

BLD is trading at a steep 25% discount to the All Industrials ex-financials on FY18 price/earnings estimates, which is significantly below the historical trading range.
This is largely attributable to the proposed acquisition of Headwaters, reflecting the size of the transaction and concerns around coal-linked fly ash and regulatory approvals.
In our opinion, investor concerns are overstated.
The catalysts that could drive a re-rating include regulatory approvals, delivery on FY17 expectations and evidence of synergy execution.
On the technical front, since November last year an uptrend has developed, characterised by a series of higher highs and higher lows.
We like the recent compression in the shorter-term EMAs (red) and bounce from the longer-term EMAs (green). This suggests those active in the stock are willing to bid up dips and that longer-term momentum is becoming more bullish.
We are targeting a move to $6.50.

Shares to buy: Downer EDI Limited (DOW)

Downer's 1H net profit of $78m beat most forecasts and FY17 net profit guidance was raised 7% - to $175M.
The strong result suggests that the earnings recovery is well underway for Downer, and gaining momentum.
The recent results release saw the stock pop sharply, up to $7.50.
The stock has since retraced to close the gap, finding support in the $6.60 region.
Yesterday's action saw a buy signal off this support region and that's our opportunity to consider longs.
Traders can be buyers around current levels, with targets to $7.50.

Shares to buy: Fortescue Metals Group (FMG)

FMG recently confirmed that it is on track to hit the top end of its iron ore export guidance, and possibly exceed it, whilst at the same time continue to cut costs.
The company also took its unit costs below $US13 per tonne for the first time in the December quarter, with an average "C1" cost of $US12.54 per wet metric tonne.
Fortescue has now lowered its cost for a 12th consecutive quarter.
The company managed to pay down another $US1 billion of debt in the past quarter and said it held $US1.2 billion in cash at the end of December, while net debt stood at $US4 billion.
After reporting another strong quarter of shipments and cost cuts, chief executive Nev Power said shareholders could be in line for better returns.
"We need to continue diverting most of our cash flow to repaying debt. But we will progressively look to increase returns to shareholders," he told reporters.
The company declared a 12 cents per share final dividend in August, exceeding analyst expectations. It will declare its next interim dividend on February 22.
These are obviously all positives for a company that continues to deliver on its guidance, cut costs and pay down debt, and we believe that market will continue to reward FMG by bidding up its shares.
Technically, the stock is in a fairly well defined uptrend, where momentum is strong but not currently overdone.
Targets are towards $8.

vs. ASX ACCUMULATION INDEX

Australian Stock Report’s recommendations are measured against the ASX 200 Accumulation Index. Accumulation indices assume that dividends are reinvested and so measure both growth and dividend income. Price indices (non-accumulation indices) do not take dividends into account and measure price growth only.

ASR

ASX

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DISCLAIMER: *Performance is derived from recommendations provided by Australian Stock Report’s Investing Report, opened on or after date of acquisition in Nov 2014 *Return figures are gross returns and do not take into account fees or brokerage costs. *Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published. *ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015

Outperformance %

Outperformance is calculated as the difference between Australian Stock Report’s recommendations and the ASX 200 Accumulation Index.

ASR

ASX

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DISCLAIMER: *Performance is derived from recommendations provided by Australian Stock Report’s Investing Report, opened on or after date of acquisition in Nov 2014 *Return figures are gross returns and do not take into account fees or brokerage costs. *Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published. *ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015

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Trading Report

The Trading Report provides structured, in-depth, buy and sell recommendations on ASX companies. The research team employs both fundamental and technical analysis in order to ensure only the best opportunities are presented to clients. The Trading Report is best suited to short- and medium-term traders and investors.

Australian Stock Report Pty Limited (ABN 91 106 863 978. AFSL 301682) (ASR). Please refer to, and consider the ASR Financial Services Guide prior to acquiring or relying on any ASR products for investment purposes. ASR offers general advice only about financial products (limited to equities and derivatives) and any recommendation provided by ASR is provided without any regard to your individual needs and objectives. ASR is a part of the Amalgamated Australian Investment Group Limited (ABN: 81 140 208 288) group of financial service companies. Financial Services Guide